The Stern Review and its critics: implications for the theory and practice of costs-benefits analysis
AbstractThe “Stern Review: The Economics of Climate Change” reached conclusions and policy recommendations dramatically different from most of the earlier economic analyses of climate change. It found that the costs of climate change, as well as the potential net benefits of greenhouse gas reductions, were much higher than previously estimated, and consequently recommended more rapid and extensive cuts in emissions than had many other economist analysts. A number of prominent economists have criticized the Stern Review on various grounds, including its damage estimates and the selection of parameter values, which affect the interest rate at which future costs and benefits are discounted to present value. This paper summarizes the Stern Review and its critiques, and assesses them from a process-oriented perspective to determine what they can teach us, positively and negatively, about how benefit-cost analyses should (or should not) be carried out.
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Bibliographic InfoArticle provided by Associazione Rossi Doria in its journal QA.
Volume (Year): (2007)
Issue (Month): 4 (November)
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Cost-Benefit Analysis; Discounting; Discount Rate; Climate Change;
Find related papers by JEL classification:
- D60 - Microeconomics - - Welfare Economics - - - General
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- H40 - Public Economics - - Publicly Provided Goods - - - General
- K32 - Law and Economics - - Other Substantive Areas of Law - - - Environmental, Health, and Safety Law
- O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General
- Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
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- Ben Groom & Cameron Hepburn & Phoebe Koundouri & David Pearce, 2005. "Declining Discount Rates: The Long and the Short of it," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 32(4), pages 445-493, December.
- David Pearce & Ben Groom & Cameron Hepburn & Phoebe Koundouri, 2003. "Valuing the Future," World Economics, World Economics, Economic & Financial Publishing, PO Box 69, Henley-on-Thames, Oxfordshire, United Kingdom, RG9 1GB, vol. 4(2), pages 121-141, April.
- Heal, G., 1998. "Valuing the Future: Economic Theory and Sustainability," Papers 98-10, Columbia - Graduate School of Business.
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